Gold Prices Hitting Lows; Is A Big Move Coming?

Saturday, March 11, 2017

gold prices

It’s no secret that precious metals like gold and silver have had a rough couple of weeks. Gold prices are currently flirting with dipping below $1,200 per ounce, about the lowest it’s seen in a month. And with the Federal Reserve meeting looming, there are some who believe that an interest rate hike will send the precious metal dipping even lower.

But is this indicative of a poor performance, or is it a premium buying opportunity for those who believe gold is only headed upward in 2017? Let’s examine more closely.

SeekingAlpha Still Waiting For “Signs Of A Bottom”

An article published today at Seeking Alpha included notes that the author was still looking for the bottom of a gold—the obvious implication being that said analyst has not seen one yet. There appear to be some signals that gold should be about where it is, which means that a bottom has not yet been reached if there is truly pessimism in the precious metals market.

According to the analyst, however, there may be reason to think of the current price as an opportunity. Quoting the old adage that you should “sell when others are greedy and buy when others are fearful,” we can only put gold in the latter category as the price dips. If that’s true, then investors should be optimistic about a buying opportunity. But what about gold’s measurable, and its predicted performance?

Gold On A New Losing Streak Not Seen Since Last Year

Last May was the last time gold suffered a losing streak like this, CNBC points out. While that may seem like it’s a harbinger of bad news, it’s important to remember how well gold performed in the months after that. Gold saw a spike in the summer months fueled by the news of Brexit—many investors were worried about the state of the economy and put much of their money in precious metals as a hedge.

That doesn’t mean we’ll see a repeat in 2017. But as CNBC noted, Bank of America Merill Lynch strategists recently predicted as high as a $1,400 performance for the yellow metal, which gives even hardened investors a reason to be cautiously optimistic about its prospects. And if that’s the case, then gold’s recent lows aren’t bad news; they could simply be buying opportunities.

Next Week Is Another “Hinge” In Financial News

What’s looming in economic news: the Federal Reserve meetings next week that could determine if there is going to be a hike in interest rates. These rates could change the value of the dollar, which in turn changes the value of gold.

It may be that cautious investors are waiting to see what happens next week before making a move on gold, even if they believe it’s a buying opportunity. If gold reacts poorly to next week’s news, that could be the buying opportunity many investors are seeking. But only time will tell whether this current market is an aberration for gold or if muted prices are here to stay.

Gold-Eagle provides regular commentary and analysis of gold, precious metals and the economy. Be the first to be informed by signing up for our free email newsletter.
 

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Darren Capriotti

Darren Capriotti has been a market analyst for the past decade and is an expert in precious metals. He prides himself on his ability to analyze the market and offer true value to investors with questions about gold, silver, and other precious metals. Highly educated, incredibly passionate, and more accurate than most, Darren offers a true, unbiased look into what investors can expect in the precious metals market. You can reach Darren at dcapriotti@gold-eagle.com.

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